Also, see other BLS Program Surveys

Between June 2009, the start of the national recovery according to the National Bureau of Economic Research, and the end of 2012, the national unemployment rate dropped by 1.7 percentage points, to 7.8 percent, while the rate in New York City declined by only 0.6 percentage point, to 8.8 percent.1 This relatively small drop in the New York City rate occurred during a period of robust growth in payroll jobs in the city (up 6.2 percent). Nationally, the unemployment rate has remained high, or even increased, on several occasions during periods of recovery.2 Still, a number of observers of the New York City economy voiced the expectation that, given the size of the growth of nonfarm jobs, the city’s unemployment rate should have dropped further during 2012.3

This article examines the behavior of New York City’s unemployment rate from several perspectives. The analysis begins by placing the unemployment rate and the growth of nonfarm jobs in their historical context. The aim is to identify other periods in which strong job growth coexisted with persistent high unemployment. Then the labor force participation rate and the employment–population ratio are examined to see if they shed light on the inertia in the unemployment rate. The unemployment rate and the count of nonfarm jobs are based on two different surveys, of households and business establishments, respectively. The two surveys have different concepts of employment, making it difficult to infer that increases in nonfarm payroll jobs will translate into proportional increases in the number of employed city residents. However, an analysis of data from another household survey—the American Community Survey (ACS)—makes possible an examination of whether that survey’s patterns are similar to those in the Bureau of Labor Statistics (BLS) household survey. The article concludes with a comparison of movements in data from the two household surveys.

Job growth and unemployment: the historical context

Over the past 22 years, New York City has experienced several large swings in the pace of job growth. Chart 1 presents over-the-year changes in nonfarm employment, beginning with August 1991. The shaded areas indicate periods of over-the-year job growth greater than or equal to 1.5 percent, combined with an unemployment rate at or above 8.0 percent. As the chart shows, the city experienced three periods of sustained job loss, each of which was followed by years-long periods of job gains.4 The most recent upturn in payroll employment began in April 2010, although the initial pace of job growth was relatively modest, remaining below 1.5 percent until October of that year. From October 2010 until August 2013, the over-the-year change in employment ranged from a high of 2.9 percent to a low of 1.5 percent. This pattern of recoveries beginning with modest growth and then strengthening is also seen in the upturns that began in June 1993 and May 2004.

Chart 1

Over-the-year change in employment, New York City, seasonally adjusted, August 1991–August 2013

Month

Over-the-year percent change

Aug 1991

-6.1

Sep 1991

-6.0

Oct 1991

-5.1

Nov 1991

-5.0

Dec 1991

-5.1

Jan 1992

-3.8

Feb 1992

-3.8

Mar 1992

-3.7

Apr 1992

-3.3

May 1992

-3.2

Jun 1992

-3.2

Jul 1992

-2.2

Aug 1992

-2.2

Sep 1992

-2.3

Oct 1992

-2.1

Nov 1992

-2.1

Dec 1992

-1.6

Jan 1993

-1.0

Feb 1993

-0.5

Mar 1993

-0.6

Apr 1993

-0.4

May 1993

-0.2

Jun 1993

0.1

Jul 1993

0.9

Aug 1993

0.7

Sep 1993

0.5

Oct 1993

1.0

Nov 1993

1.3

Dec 1993

1.3

Jan 1994

0.9

Feb 1994

0.9

Mar 1994

1.2

Apr 1994

1.1

May 1994

1.2

Jun 1994

1.0

Jul 1994

0.7

Aug 1994

0.8

Sep 1994

0.7

Oct 1994

1.0

Nov 1994

1.0

Dec 1994

0.9

Jan 1995

0.9

Feb 1995

0.8

Mar 1995

0.6

Apr 1995

0.6

May 1995

0.5

Jun 1995

0.5

Jul 1995

0.5

Aug 1995

0.6

Sep 1995

0.6

Oct 1995

0.2

Nov 1995

0.3

Dec 1995

0.3

Jan 1996

-0.2

Feb 1996

0.6

Mar 1996

0.6

Apr 1996

0.7

May 1996

1.0

Jun 1996

1.2

Jul 1996

0.9

Aug 1996

1.1

Sep 1996

1.2

Oct 1996

1.5

Nov 1996

1.4

Dec 1996

1.5

Jan 1997

2.3

Feb 1997

1.5

Mar 1997

1.9

Apr 1997

1.9

May 1997

1.7

Jun 1997

1.7

Jul 1997

2.6

Aug 1997

2.4

Sep 1997

2.6

Oct 1997

2.5

Nov 1997

2.4

Dec 1997

2.6

Jan 1998

2.5

Feb 1998

2.6

Mar 1998

2.5

Apr 1998

2.5

May 1998

2.6

Jun 1998

2.6

Jul 1998

2.3

Aug 1998

2.6

Sep 1998

2.2

Oct 1998

2.3

Nov 1998

2.6

Dec 1998

2.4

Jan 1999

3.0

Feb 1999

2.9

Mar 1999

2.7

Apr 1999

2.6

May 1999

2.3

Jun 1999

2.5

Jul 1999

2.6

Aug 1999

2.7

Sep 1999

2.1

Oct 1999

2.5

Nov 1999

2.6

Dec 1999

2.6

Jan 2000

2.4

Feb 2000

2.4

Mar 2000

2.6

Apr 2000

3.3

May 2000

3.6

Jun 2000

3.2

Jul 2000

2.9

Aug 2000

2.0

Sep 2000

3.2

Oct 2000

2.7

Nov 2000

2.4

Dec 2000

2.4

Jan 2001

2.0

Feb 2001

1.6

Mar 2001

1.4

Apr 2001

0.3

May 2001

-0.2

Jun 2001

-0.4

Jul 2001

-0.2

Aug 2001

0.1

Sep 2001

-1.4

Oct 2001

-3.8

Nov 2001

-3.9

Dec 2001

-4.2

Jan 2002

-4.4

Feb 2002

-4.1

Mar 2002

-4.1

Apr 2002

-3.7

May 2002

-3.3

Jun 2002

-3.3

Jul 2002

-3.7

Aug 2002

-3.5

Sep 2002

-2.8

Oct 2002

-0.7

Nov 2002

-0.7

Dec 2002

-0.6

Jan 2003

-0.7

Feb 2003

-1.1

Mar 2003

-1.3

Apr 2003

-1.5

May 2003

-1.7

Jun 2003

-1.8

Jul 2003

-1.8

Aug 2003

-1.9

Sep 2003

-1.3

Oct 2003

-1.2

Nov 2003

-1.1

Dec 2003

-1.1

Jan 2004

-0.9

Feb 2004

-0.6

Mar 2004

-0.1

Apr 2004

0.0

May 2004

0.3

Jun 2004

0.7

Jul 2004

0.9

Aug 2004

1.1

Sep 2004

0.8

Oct 2004

1.0

Nov 2004

1.0

Dec 2004

1.0

Jan 2005

1.5

Feb 2005

1.3

Mar 2005

1.1

Apr 2005

1.7

May 2005

1.4

Jun 2005

1.3

Jul 2005

1.6

Aug 2005

1.5

Sep 2005

1.9

Oct 2005

1.4

Nov 2005

1.7

Dec 2005

1.9

Jan 2006

1.6

Feb 2006

1.6

Mar 2006

1.9

Apr 2006

1.7

May 2006

1.9

Jun 2006

1.9

Jul 2006

1.6

Aug 2006

1.4

Sep 2006

1.6

Oct 2006

2.1

Nov 2006

2.0

Dec 2006

2.2

Jan 2007

2.3

Feb 2007

2.4

Mar 2007

2.2

Apr 2007

1.9

May 2007

1.9

Jun 2007

2.0

Jul 2007

2.1

Aug 2007

2.3

Sep 2007

2.1

Oct 2007

2.2

Nov 2007

2.1

Dec 2007

1.8

Jan 2008

2.0

Feb 2008

1.9

Mar 2008

1.8

Apr 2008

2.0

May 2008

2.0

Jun 2008

1.7

Jul 2008

1.6

Aug 2008

1.6

Sep 2008

1.3

Oct 2008

0.7

Nov 2008

0.2

Dec 2008

-0.2

Jan 2009

-1.1

Feb 2009

-1.7

Mar 2009

-2.2

Apr 2009

-3.2

May 2009

-3.2

Jun 2009

-3.3

Jul 2009

-2.7

Aug 2009

-3.1

Sep 2009

-3.5

Oct 2009

-3.2

Nov 2009

-2.9

Dec 2009

-2.5

Jan 2010

-1.9

Feb 2010

-1.4

Mar 2010

-0.6

Apr 2010

0.6

May 2010

1.1

Jun 2010

1.2

Jul 2010

0.0

Aug 2010

0.3

Sep 2010

1.1

Oct 2010

1.6

Nov 2010

1.8

Dec 2010

1.8

Jan 2011

2.0

Feb 2011

2.2

Mar 2011

2.1

Apr 2011

2.2

May 2011

1.6

Jun 2011

1.7

Jul 2011

2.9

Aug 2011

2.9

Sep 2011

2.9

Oct 2011

2.4

Nov 2011

2.5

Dec 2011

2.4

Jan 2012

2.3

Feb 2012

2.4

Mar 2012

2.5

Apr 2012

2.2

May 2012

2.4

Jun 2012

2.4

Jul 2012

1.9

Aug 2012

2.2

Sep 2012

2.5

Oct 2012

2.2

Nov 2012

1.5

Dec 2012

2.0

Jan 2013

2.2

Feb 2013

1.6

Mar 2013

1.6

Apr 2013

1.9

May 2013

1.8

Jun 2013

1.9

Jul 2013

1.8

Aug 2013

1.6

Note: Shaded areas indicate periods of over-the-year job growth greater than or equal to 1.5 percent, combined with an unemployment rate at or above 8.0 percent. Data for August 2013 are preliminary.Source: U.S. Bureau of Labor Statistics, Current Employment Statistics.

For the purpose of examining the connection between the growth in payroll jobs and changes in the unemployment rate, it is useful to separate periods of modest job growth from periods of strong job growth with a distinguishing value or threshold. This article uses a threshold of 1.5-percent per year.5 Labor force growth in New York City has generally been less than 1.0 percent, so it is plausible to expect job growth rates of 1.5 percent or higher to be associated with falling unemployment. Observers such as the Fiscal Policy Institute and Julie Anna Golebiewski, an economist with the New York City Independent Budget Office, voiced the expectation that the pace of over-the-year job growth in 2012 (which ranged from 2.5 percent to 1.5 percent) could have resulted in a falling unemployment rate.6

There have been occasions when strong over-the-year job growth was associated with substantial reductions in the unemployment rate. For example, from May 1998 through February 2001 the rate of job growth ranged from 3.6 percent to 1.6 percent. As chart 2 illustrates, the unemployment rate declined from 8.0 percent to 5.3 percent over that same period.7

Note: Shaded areas indicate periods of over-the-year job growth greater than or equal to 1.5 percent, combined with an unemployment rate at or above 8.0 percent. Data for August 2013 are preliminary.Source: U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics.

Chart 2 also shows that strong job growth with persistent high unemployment is not unprecedented. The shaded areas in the chart show periods with job growth of 1.5 percent or higher, combined with an unemployment rate at or above 8.0 percent. The period from October 2010 through August 2013 meets these criteria, with the unemployment rate averaging 9.0 percent. It has not been widely recognized, however, that the period from December 1996 through May 1998 also combined strong job growth with high unemployment. Over that 18-month period, the unemployment rate was 9.1 percent—almost the same as that in the most recent period.

If 9.0 percent were used as a threshold for high unemployment, the two shaded areas would be smaller but still important. The first period would start with December 1996 and last 10 months, and the second would start with June 2011 and last 17 months.

Labor force participation rates and the employment–population ratio

Chart 3 presents seasonally adjusted data from the BLS Local Area Unemployment Statistics (LAUS) program (the program that produces state and area unemployment rates), with the same periods shaded as in chart 2.8 One of the unusual aspects of the labor market in New York City is that the labor force participation rate has trended upward over the past 22 years. As the chart indicates, the rate rose by 3.4 percentage points. Nationally, the rate declined by 2.8 percentage points over the same period.

Note: Shaded areas indicate periods of over-the-year job growth greater than or equal to 1.5 percent, combined with an unemployment rate at or above 8.0 percent. Data for August 2013 are preliminary.Source: U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics.

The chart also shows that the labor force participation rate and the employment–population ratio in New York City both increased from December 1996 to April 1998. During that period, the unemployment rate remained high, in part because of the expansion of the labor force.

The city’s employment–population ratio also trended upward—at least until March 2008, after which it dropped 2.7 percentage points over the next 20 months. Following a low of 53.9 percent reached in November 2009, the ratio rebounded in the spring of 2010. However, since August 2010, the employment–population ratio has fluctuated in a narrow range around 54.3 percent, slightly above its recessionary low. Over this same period, the labor force participation rate has remained within 0.5 percentage point of 59.6. The persistence of high unemployment during that timespan reflects the persistence of the near-recessionary level of the employment–population ratio combined with a relatively high labor force participation rate.

The question thus arises as to why the employment–population ratio in New York City remained little changed despite the increase in nonfarm jobs. A number of observers raised the related question of why large percentage increases in jobs were not resulting in large percentage increases in the count of employed city residents.9

At the national level, although the BLS household and establishment surveys track well over the long run, occasionally they also have reported large differences in changes in employment. One article by BLS economists reviewed efforts to understand why household employment (from the Current Population Survey) increased nationally by 2.3 million from 2001 to 2004 while payroll employment (from the Current Employment Statistics survey of business establishments) shrank by 0.3 million.10 An earlier study, using a slightly different methodology, had looked at the period from 1994 to 2000, when the job count increased by 17.5 million whereas the number of employed people grew by 12.1 million.11 Both of these articles noted that the household survey includes not only wage and salary workers, but also the self-employed, unpaid family workers, people employed by private households, and workers temporarily absent from work without pay. The household and establishment surveys also differ in their reference periods and geographies (place of work versus place of residence), their treatment of multiple jobholding, and the age of workers, among other things.12 Both articles concluded that, although various adjustments for industry, class of worker, and multiple jobholding explain some of the discrepancies, it is not possible to completely reconcile movements in the two national series for the periods in question.

In New York City, the sample sizes are smaller than those on the national level, resulting in larger standard errors. This difference makes it difficult to analyze over-the-year changes for those categories, such as the self-employed, used in attempts at reconciliation. In short, the conceptual differences between the two series are at least partially responsible for some of their substantive differences, but complete reconciliation is not always feasible at the national level, and it is even more difficult with New York City data.

The American Community Survey: another perspective on city residents

The Census Bureau introduced the American Community Survey (ACS) to replace the long-form questionnaire used in the decennial census. Like the long form, the ACS is designed to be self-administered and collected by mail, although other means of collection are used to follow up with those who do not respond by mail. By contrast, the Current Population Survey (CPS) is conducted by trained interviewers. Like the CPS, the ACS asks questions about the employment and unemployment of household members. These questions differ, however, from those posed in the CPS. In particular, respondents to the ACS are not asked about specific job search activities. The two surveys also have different approaches to defining their reference period and to accounting for the worker’s place of residence.13 Nonetheless, the fact that the ACS counts people (rather than nonfarm jobs) and that it provides estimates by place of residence (as well as place of work) means that that survey offers another tool for examining the effects of the recovery on New York City residents. Both surveys publish data on New York City as annual averages (and not on a monthly basis).

Chart 4 presents annual average unemployment rates from the ACS, along with rates from the LAUS models and the CPS. (The inclusion of both the LAUS and the CPS rates allows us to see the effects of the models on the survey’s annual averages.14) The chart begins with 2008 data because the ACS changed its questionnaire in that year to ask unemployed people if they actively looked for work—a question that is similar to that in the CPS; the chart ends with 2012 because that year’s data are the most current ACS data on unemployment.15 The LAUS unemployment rates differ from the CPS rates by tenths of a percentage point, indicating that the models had relatively small effects on the annual averages. In contrast, during the 2008–2012 period, the ACS measure exceeded the official estimates produced by the LAUS program by an average of 1.6 percentage points, although the difference was as much as 2.2 percentage points in 2011. The fact that the numbers differ is not surprising, given the difference in questions, collection methods, and samples between the ACS and LAUS series. The fact that the ACS numbers are higher than the estimates produced by the LAUS program and the CPS is also not surprising: generally, comparisons of ACS unemployment rates with CPS rates for the nation and for the states have found that the ACS rates were higher.16

Sources: Current Population Survey and Local Area Unemployment Statistics data: U.S. Bureau of Labor Statistics; American Community Survey data: U.S. Census Bureau.

For the purposes of this article, chart 4 is valuable because it shows that the ACS measure has followed the same general path as the LAUS and CPS measures. Specifically, the ACS indicates that a high unemployment rate in New York City persisted in 2011 despite the growth in nonfarm jobs. The ACS also indicates that the unemployment rate may have dropped slightly in 2012. However, the broader pattern of persistent high unemployment is still evident: in none of the three series is the unemployment rate for 2012 significantly lower than it was in 2009.

The LAUS measure indicates that the employment–population ratio for New York City residents dropped by 1.8 percentage points from 2008 to 2009 and has remained below 55 percent since then. Chart 5 shows that the comparable ACS measure, despite always being higher than the CPS measure, was little changed in 2011, although it rose slightly in 2012.17

Sources: Current Population Survey and Local Area Unemployment Statistics data: U.S. Bureau of Labor Statistics; American Community Survey data: U.S. Census Bureau.

The labor force participation rate, as measured by LAUS, was 59.5 percent in 2008 and has remained within 0.6 percentage point since then. Similarly, the ACS measure of the labor force participation rate has changed relatively little since 2008, remaining within 0.7 percentage point of the 2008 estimate of 63.5 percent.

Conclusion

The recent period of persistent high unemployment combined with strong growth in the number of payroll jobs in New York City (a period that began in October 2010 and extended through August 2013) is not unprecedented. During an earlier period, from December 1996 to May 1998, job growth was also robust and the arithmetic average of the unemployment rate was virtually the same as it has been during the period that started in October 2010. That earlier period was followed by a sustained period of lower unemployment.

Other characteristics of the labor market for these periods were not so similar. During the 1996–1998 period, the labor force participation rate and the employment–population ratio both rose. In contrast, during the most recent period both of these measures have been little changed. The labor force participation rate, for example, has remained within 0.5 percentage point of 59.6 percent during the recent recovery.

By contrast, nationally the labor force participation rate declined from 64.4 percent in October 2010 to 63.2 percent in August 2013. Thus, one of the reasons that the unemployment rate in New York City has remained high relative to the national rate is that New York City’s labor force participation rate, unlike the nation’s, has not declined.

Finally, data from the ACS confirm that the unemployment rate for residents of New York City was little changed in 2011. In that year, the large increase in payroll jobs had little effect on the employment–population ratio, as measured by both the CPS and the ACS, and the continued low level of the ratio is part of the reason that high unemployment has persisted. In 2012, the ACS indicated a slight improvement in the employment–population ratio and a dip in the unemployment rate, but the pattern of high unemployment remained.

Upcoming articles

Disability insurance plans: employee access and employer costs

Entertainment spending

This Beyond the Numbers summary was prepared by Martin Kohli, Chief regional economist in the New York Regional Office for Economic Analysis and Information, U.S. Bureau of Labor Statistics. Email: kohli.martin@bls.gov. Telephone: (646) 264-3620.

Information in this article will be made available to individual with sensory impairments upon request. Voice phone: (202) 691-5200. Federal Relay Service: 1-800-877-8339. This article is in the public domain and may be reproduced without permission.

4 The periods of job loss and job gain in the city do not coincide neatly with the business cycle dates of the NBER. Because observers of the city’s economy focus on counts of jobs, this article will use periods of local job loss and job gain (rather than the NBER’s dates) as a framework for the analysis presented.

5 BLS does not have a general criterion for distinguishing periods of strong job growth from weak.

7 Labor force estimates for New York City are produced by the BLS Local Area Unemployment Statistics (LAUS) program. The models used to estimate employment and unemployment are designed to identify and remove sampling error in monthly data from the Current Population Survey (CPS). For more information on the LAUS estimation methodology, see “Estimation methodology,” Local Area Unemployment Statistics (U. S. Bureau of Labor Statistics, September 11, 2009), http://www.bls.gov/lau/laumthd.htm.

8 Monthly estimates of the labor force participation rate and the employment–population ratio for New York City (and a number of other subnational areas) are given in “Civilian noninstitutional population and associated rate and ratio measures for model-based areas,” Local Area Unemployment Statistics (U. S. Bureau of Labor Statistics, April 19, 2013), http://www.bls.gov/lau/rdscnp16.htm.

14 As earlier noted, the LAUS models of employment and unemployment are intended to remove sample error from the monthly CPS estimates.

15 See Kromer and Howard, Comparison of ACS and CPS data. Even with this change, the ACS question was considerably more general than questions in the CPS, which asked about specific types of job searches.